2026 Predictions: Trends in Gen AI, Gaming & Digital Ad Spend

Key insights

5 slides

The forecast

Generative AI apps are projected to become a top-five category by 2026.

The report projects generative AI apps will generate over $10 billion in worldwide in-app-purchase revenue in 2026. It also projects 7.2 billion downloads and 43 billion hours of usage.

Ad spend

U.S. digital ad spend will reach $20 billion in 2026, with image-based creatives growing faster.

Image-based creatives are projected to grow 35% year-over-year, outpacing the 15% growth rate of video formats. Social platforms, specifically Meta’s Reels, are shifting budgets toward static formats.

See it on page 21

United States Digital Ad Spend by Creative Type Across Select Digital Ad Channels · %

Overall208

Social158

Mobile58

Desktop0

OTT0

Video150

Image35

Playable48

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Summary

The 2026 digital economy landscape is defined by the rapid maturation of generative AI, a shift in advertising creative strategies, and the necessity for mobile games to adopt aggressive monetization models to combat rising user acquisition costs. The industry is moving toward shorter development cycles and a greater reliance on data-driven engagement formats, such as vertical video and ad-native gameplay, to maintain growth in a saturated market.

Generative AI is projected to become a top-five mobile app genre by 2026, with annual in-app purchase revenue exceeding $10 billion. This growth is bolstered by the rising influence of AI-driven web traffic, which is expected to surpass paid advertising as a primary driver for over half of the top 1,000 websites in the United States by the end of 2026. Simultaneously, the short-form video format continues to evolve; while traditional OTT streaming remains dominant in time spent, short-drama apps are rapidly gaining ground in both downloads and revenue.

In the advertising sector, there is a notable pivot from video to image-based creatives, particularly within social platforms like Meta’s Reels, where image-focused ad spend has seen triple-digit year-over-year growth. This shift reflects a broader trend of advertisers seeking more efficient ways to capture attention amidst the saturation of traditional video ads.

The mobile gaming industry faces a contraction in total downloads, which are trending toward pre-pandemic levels. To succeed, developers are increasingly pairing ad-friendly, instantly legible gameplay hooks with deep, multi-layered monetization systems, such as gacha and season passes. Furthermore, the integration of AI tools is accelerating production timelines, leading to a decline in long-cycle AAA projects in favor of more frequent, smaller-scope game releases. These findings are based on comprehensive market data covering global mobile app stores, US digital advertising channels, and Steam release metrics through late 2025.